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Unemployment benefit deadline looms
A Saturday deadline looms at the Minnesota Legislature as both parties try to come to an agreement that avert a tax hike on businesses.
ST. PAUL, Minn. (FOX 9) - The calendar has become the biggest opponent working against Minnesota lawmakers who remain at odds over refilling the state's unemployment insurance fund and avoiding a tax increase on businesses due without a deal by Saturday.
The Senate is scheduled to leave town after its Thursday floor session, meaning there is little time left for a deal. The issue has been one of the most contentious since the legislative session started in January. Lawmakers were nearing a deal last weekend -- even getting an optimistic mention in Gov. Tim Walz's State of the State -- but appear to have slid backward this week.
State law triggers a payroll tax increase whenever the unemployment benefit fund falls below a certain level. Quarterly payments -- including the higher tax -- are due May 2. Lawmakers would have to pass legislation to turn the switch back off.
This week, House Democrats passed legislation that includes $2.7 billion to refill the unemployment benefits fund, $1 billion in bonuses for workers on the frontlines of the pandemic and another $161 million to extend jobless benefits to hourly school workers during the summer months.
The hourly school worker provision is the latest wrinkle in negotiations. Democrats said it was necessary to close a gap in the state's unemployment benefit system.
"It’s really stupid in state law. It says everyone’s entitled to unemployment insurance, except for these few people," House Speaker Melissa Hortman, DFL-Brooklyn Park, told reporters. "Senate Republicans need to join us to get this done."
No one is sure the provision will cost $161 million. House Democrats said they estimate it will pay $28 million a year in additional benefits. What's clear is that state taxpayers -- not school districts -- will pick up the tab, at least initially.
Republicans who control the Senate favor a clean bill focused solely on using $2.7 billion to refill the unemployment fund. That will hold businesses harmless as the state starts to pay back federal loans incurred during the COVID-19 pandemic.
Senate leaders have criticized their House counterparts for being unwilling to agree to their terms earlier in the year, avoiding deadline drama.
"Two weeks into the session, we passed a bill to fully refill the (unemployment insurance) trust fund with strong bipartisan support," Senate Majority Leader Jeremy Miller, R-Winona, said earlier this week. "We've made progress, but we've not yet reached a deal."
Officials at the Minnesota Department of Employment and Economic Development estimate that businesses owe between $350 million and $400 million in quarterly payments on April 30. While the size of the tax hike is based on a formula depending on how much a business uses unemployment benefits, most businesses in the state face some tax increase.